Tags: moody’s | zandi | housing | market | homes

Moody's Economist Zandi: Housing Market Should 'Cool Off' Later in Year

By    |   Wednesday, 24 June 2020 09:04 AM

Moody’s Analytics chief economist Mark Zandi predicts that housing growth will ease later in the year after being one of the most resilient areas of the economy during the coronavirus downturn.

“The confluence of high unemployment and the end of the forbearance measures means that we’ll get more defaults and ultimately more foreclosures, more foreclosure sales, and that’ll put some weakness into the housing market,” Zandi told CNBC.

Zandi spoke hours after new-home sales in the U.S. rose more than expected in May, with record-low mortgage rates pulling buyers back into a housing market that froze up during the pandemic.

Purchases of single-family houses climbed 16.6%, the second-largest monthly advance since 1992, to a 676,000 annualized pace, government data showed Tuesday. The median forecast in a Bloomberg survey of economists was 640,000.

Meanwhile, pandemic fears have sparked increased interest for homes in suburban and rural areas, according to real estate firms, leading to demand outstripping supply. “There’s a severe lack of homes, both in the new market and the existing market,” he said.

Millions of homeowners have taken advantage of forbearance programs that allow borrowers to miss mortgage payments, helping to insulate the housing market from a historic rise in unemployment, CNBC explained.

Zandi said the housing market has “navigated the pandemic remarkably well, and there are some very solid underpinnings. It’s just going to cool off a bit later this year.”

Homebuilders are welcoming back buyers after social-distancing rules across much of the U.S. kept them on the sidelines in March and April, Bloomberg said. Newly built properties are gaining favor because previously owned houses are in short supply. Record-low interest rates have put new homes within reach of more buyers.

The sales results are further evidence that housing is proving to be a bright spot in the economy even with unemployment at levels not seen since the Great Depression.

“The fact that we’re reaching the levels we are in a pandemic and a recession is unbelievable,” said Ali Wolf, chief economist at Meyers Research. “Low rates have tilted the equation toward some buyers actually being able to afford a new home.”

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Moody's Analytics chief economist Mark Zandi predicts that housing growth will ease later in the year after being one of the most resilient areas of the economy during the coronavirus downturn.
moody’s, zandi, housing, market, homes
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2020-04-24
Wednesday, 24 June 2020 09:04 AM
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